Investment Office ANRS

Project Profile on the Establishment of Roof

TILES From CLAY Production PLANT

Development Studies Associates

(DSA)

October 2008
Addis Ababa
 Table of Contents

1. Executive Summary..................................................................................1
2. Product Description and Application....................................................1
3. Market Study, Plant Capacity and Production Program...................2
3.1 Market Study.......................................................................................................2
3.1.1 Present Demand and Supply........................................................................2
3.1.2 Projected Demand........................................................................................2
3.1.3 Pricing and Distribution...............................................................................3
3.2 Plant Capacity......................................................................................................3
3.3 Production Program.............................................................................................3
4. Raw Materials and Utilities....................................................................3
4.1 Availability and Source of Raw Materials...........................................................3
4.2 Annual Requirement and Cost of Raw Materials and Utilities...........................3
5. Location and Site.....................................................................................4
6. Technology and Engineering.................................................................4
6.1 Production Process...............................................................................................4
6.2 Machinery and Equipment...................................................................................5
6.3 Civil Engineering Cost........................................................................................6
7. Human Resource and Training Requirement......................................6
7.1 Human Resource..................................................................................................6
7.2 Training Requirement..........................................................................................6
8. Financial Analysis...................................................................................7
8.1 Underlying Assumption.......................................................................................7
8.2 Investment............................................................................................................8
8.3 Production Costs..................................................................................................9
8.4 Financial Evaluation............................................................................................9
9. Economic and Social Benefit and Justification..................................10
ANNEXES....................................................................................................12
 1. Executive Summary
This profile envisages the establishment of a plant for the production of 55 m 3`tons of
roof tiles from clay at full capacity.

The present countrywide demand is estimated at 7.6 million m 3 tons per annum. The
annual future countrywide demand is expected to grow to 412.59 m3 tons in the year in
the year 2018. The envisage plant will be able to cover a very small portion of the
demand

The Total Initial Investment including working capital is estimated at Birr 12.1 million of
which Birr 6.4 million is for plant machinery and equipments.

The plant will create employment opportunities for 16 persons.

The project is financially viable with an internal rate of return (IRR) of 24.15% and a net
present value (NPV) of Birr 2.7 million at 18 % annual discount rate.

2. Product Description and Application

Roofing tiles made out of clay, are used for roof covers. The existing dominant practice is
to use galvanized iron sheets whose raw material is imported in bulk as it is relatively
cheaper and simpler to use. The product comes in different gauges ranging from 28 to 32
in thickness. Production roofing tiles with locally available clay could reduce the cost of
houses construction. Although the product is relatively new to the market, it is gaining
wide acceptance in a short period of time.

1
 3. Market Study, Plant Capacity and Production
Program

3.1 Market Study

3.1.1 Present Demand and Supply

Roofing tiles made of clay can be a good substitute to the corrugated metal sheet. The
tiles can be corrugated both for aesthetic and working convenience reasons. However,
clay tiles for roofing require different kind of truss which could be more expensive for
regular type of houses. As a result, it is assumed that only high multi-storied buildings
(more than two floors) will be using clay tiles for roofing.

The demand for roof tiles in the years 2012, 2013, 2014 and 2015 were estimated at
36.22, 54.33, 81.5, and 122.5 million m 3 tons respectively. Taking a conservative
estimate of 5% annual increase, the current demand will stand at 7.16 million m3 tons.

3.1.2 Projected Demand

The following table shows the projected demand. The national countrywide demand for
clay tiles is so large that market demand will not be a tensing problem for a small project
like the one proposed.
Table 1: Projected Demand
Projected Demand
Year (million m3 tons)
2016 183
2017 275
2018 413
2019 619
2020 928
2021 1392
2022 2089
2023 3133
2024 4700

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 2025 7049
2026 10574

3.1.3 Pricing and Distribution

Currently one tone of clay tiles cost about Birr 256,600. It is suggested that this new plant
sale its product at a price of Birr 153,960 per ton allowing attractive profit margin for the
whole and retail sellers. The exiting wholesales network can be used as distribution
channel.

3.2 Plant Capacity

The plant will have a capacity of producing 10,000,000 pcs or about 55 tons of metre
squares of roofing tiles on a single shift and 275 working days per annum considering
Sundays and public holiday and some possible stoppages.

3.3 Production Program

The plant will operate at 75% and 85% capacity utilization in the first and second years
respectively. Full capacity will be reached on the third year. Gradual capacity build up is
required to allow the operators gain experience on working with the plant machinery and
equipment Co-ordination of sufficient supplies and inputs as well as penetration of the
market is also expect to take some time.

4. Raw Materials and Utilities

4.1 Availability and Source of Raw Materials

The major raw materials like clay and cement rocs are locally available. Resign and
pigments should be imported.

4.2 Annual Requirement and Cost of Raw Materials and

Utilities

The basic raw material is clay. The clay has to be burned and hence wood or coal can be
used to fire the burns. Accordingly, the annual requirement will be as follows.

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Table 2: Annual Raw material Requirements at Full Capacity
Qty      
No. Material (ton) Local Foreign Total
1 Clay 843 282,260 0 282,260
2 Grey cement 477 1,175,228 0 1,175,228
3 Aggregate 1488 591,822 0 591,822
4 Marble chips 162 82,112 0 82,112
5 Pigments 10 0 713,348 713,348
6 Resins 7 0 193,990 193,990
7 packing material   76,980 0 76,980
Total 0 860,640 2,208,402 907,338

Table 3: Annual Utility Requirement at Full Capacity

Items Unit Qyt Cost

Electricity Kwh 123750 68,063
Water m3 4500 11,925
Lump sum
Lubricants   2566
Consumable "   5132
Total     87,686

5. Location and Site

Near Bahir Dar, Dessie, Debre Markos or any localities along the major roads and where
clay soil is available can be appropriate location.

6. Technology and Engineering

6.1 Production Process
The raw clay is exposed to the weather for about a year. This will improve the plasticity
of the clay. The weathered clay is then cut and fed to heavy duty pug mill crusher. The
crushed and pugged clay is extruded in the form of blocks and is directed to a wire
cutting table.

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The blocks are allowed to dry for a few days and the dried stabs are moulded with a title
press. The moulded tiles are dried in a continuous drying kiln. After the furnace is
allowed to cool, the tiles will be unloaded for dispatch.
Alternative technological process:

The major processing stages for making roof tiles from clay are preparation of the clay
soil (i.e excavation of the soil from the ground, removing “foreign” materials, probably
grinding or breaking the soil into finer particles, moving the soil to molding section,
adding water to the soil and making it into a “dough”, putting the “dough” into moulds,
firing the “green” roof tiles in a specially designed “oven”, removing the fired tiles from
the “oven”, and finally staking the finished clay

The technology, machinery and equipment could be secured from India.

6.2 Machinery and Equipment

The machinery and equipment requirement is given Table 4 below:

Table 4: Required Machineries and Equipments

Item Description Qty. Total
1 Vibrating Tables 2
230940
2 Rubber Moulds 4500 3623192
3 Mixers 2 269430
4 Tile press 1 810856
5 Fork lift Trucks 2 1539600
6 Pallets   51320
  Total   6525338

The total cost of machinery and equipment is estimated at Birr 6.5 million
Supplier Address:
Ningbo Hualong Machinery Factory
ShenXiShan JiShiGang Town,Yinzhou District,Ningbo,ZheJiang,China
Ning Bo China (Mainland) 315172
Tel: 86-574-88003997
Fax: 86-574-88000985
admin@nbhljx.com

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 6.3 Civil Engineering Cost

The plant requires a total area of 1800 m 2 out of which 600 m2 is covered area. The total
land lease estimated at Birr 108,000 and the construction cost is estimated at Birr 3.1
million.

7. Human Resource and Training Requirement

7.1 Human Resource

The human resource requirement of the plant is a presented in Table 5.

Table 5: Human Resource Requirement at Full Capacity

Salary/Wage (Birr)

  Job Title No. Monthly Annual

  A. Administration    
1 Plant Manager 1 8981 107772
2 Secretary 1 2052.8 24633.6
3 Accountant 1 2566 30792
4 Sales man 1 2566 30792
5 Clerk 1 1283 15396
6 General Service 3 1283 46188
  B. Production   0 0
1 Technician 1 5132 61584
2 Skilled workers 3 3079.2 110851
3 Unskilled Workers 4 1026.4 49267.2
  Total 16 0 477276
Employment Benefits 20% of Annual
  Salary   0 95455.2
      0 572731

7.2 Training Requirement

Induction training is envisaged at the preparation period. Other on-job trainings may also
be required after commencement. Birr 56,452 is included in the working capital for the
training purpose.

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 8. Financial Analysis
8.1 Underlying Assumption

The financial analysis of milk powder producing plant is based on the data provided in
the preceding chapters and the following assumptions.

A. Construction and Finance

Box 1: Construction and Finance

Construction period 2 year

Source of finance 30% equity and 70% loan
Tax holidays 2 years
Bank interest rate 12%
Discount for cash flow 18%
Value of land Based on lease rate of ANRS
Spare Parts, Repair & Maintenance 3% of fixed investment

B. Depreciation

Box 2: Depreciation

Building 5%
Machinery and equipment 10%
Office furniture 10%
Vehicles 20%
Pre-production (amortization) 20%

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 C. Working Capital (Minimum Days of Coverage)
Box 3: Working Capital

Raw Material-Local 30 days

Raw Material-Foreign 120 days
Factory Supplies in Stock 30 days
Spare Parts in Stock and Maintenance 30 days
Work in Progress 10 days
Finished Products 15 days
Accounts Receivable 30 days
Cash in Hand 30 days
Accounts Payable 30 days

8.2 Investment
The total initial investment cost including the working capital at full capacity is estimated
at Birr 12.26 million. The details are shown in Table 6.

Table 6: Initial Investment and Working Capital

Total Initial Investment

Item Cost
Land 108,000
Building and civil works 3,079,200
Office equipment 192,450
Vehicles 641,500
Plant machinery & equipment 6,525,338
Total Fixed Investment 10,546,488
Pre production capital expenditure* 522,386
Total Initial Investment 11,068,874
Working capital at full capacity 1,193,957
Total 12,262,832
*Pre-production capital expenditure includes - all expenses
for pre-investment studies, consultancy fee during
construction and expenses for company‘s establishment,
project administration expenses, commission expenses,
preproduction marketing and interest expenses during
construction.

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 8.3 Production Costs
Total production cost at full capacity is estimated at 6 million. The details are shown in
Table 7.

Table 7: Production Cost at Full Capacity

Total Production Cost at Full Capacity

Items Cost
1.      Raw materials 3,115,740
2.      Utilities 82,988
3.      Wages and Salaries 572,731
4.      Spares and Maintenance 313,432
Factory costs 4,084,891
5.      Depreciation 1,058,516
6.      Financial costs 875,814
  Total Production Cost 6,019,221

8.4 Financial Evaluation

I. Profitability
The income statement (Annex 4) shows that the proposed project generates profit starting
from the first year of operation. Profits start at Birr 265,499 in first year and reach at Birr
2,505,332. Gross Profit to Sales starts at 4.18% and reach at 42.27% at eight year. The
total profit to be earned during the ten years of operation amounts to Birr 20,080,055.
These indicators prove that the project is profitable.
II. Breakeven Analysis
The breakeven analysis shows that the Total Revenue equals the Total Cost at 29.4% of
capacity which is achieved at the first year of operation.

III. Payback Period

The project pays back its initial investment at about the first quarter of the fourth year
IV. Simple Rate of Return

The simple interest rate is 20.3%.

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 V. Internal Rate of Return and Net Present Value
A 10% decrease in sales revenue will decrease the total revenue to Birr 13,983,240while a
10% increase in cots of inputs will decrease the total profit to Birr 17,398,013.73.

VI. Sensitivity Analysis

The Internal Rate of Return is 24.1% and the Net Present Value at 18% discount rate per
annum is about Birr 2.72 million

9. Economic and Social Benefit and Justification

Based on the foregoing presentation and analysis, we can learn that the proposed project
possesses wide range of benefits that complement the financial feasibility obtained
earlier. In general the envisaged project promotes the socio-economic goals and
objectives stated in the strategic plan of the Amhara National Regional State. These
benefits are listed as follows

A. Profit Generation

The project is found to be financially viable and earns Birr 20,080,055.43 in 10 years.

B. Tax Revenue

In the project life under consideration, the government will collect about Birr 7.7 million
from corporate tax payment alone (i.e. excluding income tax, sales tax and VAT). Such
result create additional fund for the regional government that will be used in expanding
social and other basic services in the region

C. Import Substitution and Foreign Exchange Saving

As there is no sufficient tiles domestic production, it will ease import burden. save hard
currency to be allocated on other vital and strategic sectors

D. Employment and Income Generation

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The proposed project is expected to create employment opportunity to 16 persons. This
would be one of the commendable accomplishments of the project.

E. Pro Environment Project

The proposed production process is environment friendly.

F. Diversity

The proposed project contributes to diversification of economy.

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ANNEXES

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 Annex 1: Total Net Working Capital Requirements (in Birr)
CONSTRUCTION PRODUCTION
  Year 1 Year 2 1 2 3 4

Capacity Utilization (%) 0 0 75% 85% 100% 100%

1. Total Inventory 0.00 0.00 1308822 1483330 1745093 1745093

Raw Materials in Stock- Total 0.00 0.00 477635.2 541318.2 636845.3 636845.3

Raw Material-Local 0.00 0.00 180687.5 204779.6 240916.6 240916.6

Raw Material-Foreign 0.00 0.00 296947.8 336538.6 395928.7 395928.7

Factory Supplies in Stock 0.00 0.00 4313.446 4890.796 5752.972 5752.972

Spare Parts in Stock and Maintenance 0.00 0.00 25644.6 29062.52 34191.95 34191.95

Work in Progress 0.00 0.00 107864.4 122246.8 143819.2 143819.2

Finished Products 0.00 0.00 215728.8 244493.6 287638.3 287638.3

2. Accounts Receivable 0.00 0.00 692820 785196 923760 923760

3. Cash in Hand 0.00 0.00 64283.43 72853.87 85709.53 85709.53

CURRENT ASSETS 0.00 0.00 1588290 1800062 2117717 2117717

4. Current Liabilities 0.00 0.00 692820 785196 923760 923760

Accounts Payable 0.00 0.00 692820 785196 923760 923760

TOTAL NET WORKING CAPITAL REQUIREMENTS 0.00 0.00 895469.9 1014866 1193957 1193957

INCREASE IN NET WORKING CAPITAL 0.00 0.00 895469.9 119396 179094 0

1
 Annex 1: Total Net Working Capital Requirements (in Birr) (continued)
PRODUCTION
  5 6 7 8 9 10

Capacity Utilization (%) 100% 100% 100% 100% 100% 100%

1. Total Inventory 1745093 1745093 1745093 1745093 1745093 1745093

Raw Materials in Stock-Total 636845.3 636845.3 636845.3 636845.3 636845.3 636845.3

Raw Material-Local 240916.6 240916.6 240916.6 240916.6 240916.6 240916.6

Raw Material-Foreign 395928.7 395928.7 395928.7 395928.7 395928.7 395928.7

Factory Supplies in Stock 5752.972 5752.972 5752.972 5752.972 5752.972 5752.972

Spare Parts in Stock and Maintenance 34191.95 34191.95 34191.95 34191.95 34191.95 34191.95

Work in Progress 143819.2 143819.2 143819.2 143819.2 143819.2 143819.2

Finished Products 287638.3 287638.3 287638.3 287638.3 287638.3 287638.3

2. Accounts Receivable 923760 923760 923760 923760 923760 923760

3. Cash in Hand 85709.53 85709.53 85709.53 85709.53 85709.53 85709.53

CURRENT ASSETS 2117717 2117717 2117717 2117717 2117717 2117717

4. Current Liabilities 923760 923760 923760 923760 923760 923760

Accounts Payable 923760 923760 923760 923760 923760 923760

TOTAL NET WORKING CAPITAL REQUIREMENTS 1193957 1193957 1193957 1193957 1193957 1193957

INCREASE IN NET WORKING CAPITAL 0.00 0.00 0.00 0.00 0.00 0.00

2
 Annex 2: Cash Flow Statement (in Birr)
CONSTRUCTION PRODUCTION
  Year 1 Year 2 1 2 3 4
TOTAL CASH INFLOW 5485056 6679014 7043670 7290006 8606364 8467800
1. Inflow Funds 5485056 6679014 692820 92376 138564 0
Total Equity 2194022 2671606 0 0 0 0
Total Long Term Loan 3291034 4007409 0 0 0 0
Total Short Term Finances 0 0 692820 92376 138564 0
2. Inflow Operation 0 0 6350850 7197630 8467800 8467800
Sales Revenue 0 0 6350850 7197630 8467800 8467800
Interest on Securities 0 0 0 0 0 0
3. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 5485056 5485056 6615125 5773885 7111852 6692016
4. Increase In Fixed Assets 5485056 5485056 0 0 0 0
Fixed Investments 5223863 5223863 0 0 0 0
Pre-production
Expenditures 261193.1 261193.1 0 0 0 0
5. Increase in Current Assets 0 0 1588289 211771.9 317657.8 0
6. Operating Costs 0 0 3074478 3469893 4063016 4063016
7. Corporate Tax Paid 0 0 0 0 784927.2 828717.8
8. Interest Paid 0 0 1952358 875813.1 729844.2 583875.4
9.Loan Repayments 0 0 0 1216407 1216407 1216407
10.Dividends Paid 0 0 0 0 0 0
Surplus (Deficit) 0 1193958 428545.4 1516121 1494512 1775784
Cumulative Cash Balance 0 1193958 1622504 3138625 4633137 6408921

3
 Annex 2: Cash Flow Statement (in Birr): Continued
PRODUCTION
  5 6 7 8 9 10
TOTAL CASH INFLOW 8467800 8467800 8467800 8467800 8467800 8467800
1. Inflow Funds 0 0 0 0 0 0
Total Equity 0 0 0 0 0 0
Total Long Term Loan 0 0 0 0 0 0
Total Short Term Finances 0 0 0 0 0 0
2. Inflow Operation 8467800 8467800 8467800 8467800 8467800 8467800
Sales Revenue 8467800 8467800 8467800 8467800 8467800 8467800
Interest on Securities 0 0 0 0 0 0
3. Other Income 0 0 0 0 0 0
TOTAL CASH OUTFLOW 6589838 6557493 6455315 5136729 5136729 5136729
4. Increase In Fixed Assets 0 0 0 0 0 0
Fixed Investments 0 0 0 0 0 0
Pre-production
Expenditures 0 0 0 0 0 0
5. Increase in Current Assets 0 0 0 0 0 0
6. Operating Costs 4063016 4063016 4063016 4063016 4063016 4063016
7. Corporate Tax Paid 872508.5 986132.3 1029923 1073714 1073714 1073714
8. Interest Paid 437906.5 291937.7 145968.8 0 0 0
9. Loan Repayments 1216407 1216407 1216407 0 0 0
10.Dividends Paid 0 0 0 0 0 0
Surplus (Deficit) 1877962 1910307 2012485 3331071 3331071 3331071
Cumulative Cash Balance 8286883 10197190 12209676 15540746 18871817 22202888

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 Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED
CONSTRUCTION PRODUCTION
  Year 1 Year 2 1 2 3 4
TOTAL CASH INFLOW 0 0 6350850 7197630 8467800 8467800

1. Inflow Operation 0 0 6350850 7197630 8467800 8467800

Sales Revenue 0 0 6350850 7197630 8467800 8467800

Interest on Securities 0 0 0 0 0 0

2. Other Income 0 0 0 0 0 0

TOTAL CASH OUTFLOW 5485056 5485055.94 3969947 3589289 4242109 4891734

3. Increase in Fixed Assets 5485056 5485055.94 0 0 0 0

Fixed Investments 5223863 5223862.8 0 0 0 0

Pre-production Expenditures 261193.1 261193.14 0 0 0 0

4. Increase in Net Working Capital 0 0 895468.8 119395.9 179093.8 0

5. Operating Costs 0 0 3074478 3469893 4063016 4063016

6. Corporate Tax Paid 0 0 0 0 0 828717.8

NET CASH FLOW -5485056 -5485055.9 2380903 3608341 4225691 3576066

CUMULATIVE NET CASH FLOW -5485056 -10970112 -8589209 -4980868 -755177 2820889

Net Present Value (at 18%) -5485056 -4648352.5 1709928 2196148 2179564 1563132

Cumulative Net present Value -5485056 -10133408 -8423481 -6227333 -4047769 -2484637

Annex 3: DISCOUNTED CASH FLOW-TOTAL CAPITAL INVESTED (Continued)

5
 PRODUCTION
  5 6 7 8 9 10
TOTAL CASH INFLOW 8467800 8467800 8467800 8467800 8467800 8467800

1. Inflow Operation 8467800 8467800 8467800 8467800 8467800 8467800

Sales Revenue 8467800 8467800 8467800 8467800 8467800 8467800

Interest on Securities 0 0 0 0 0 0

2. Other Income 0 0 0 0 0 0

TOTAL CASH OUTFLOW 4935524 5049148 5092939 5136729.37 5136729.37 5136729.37

3. Increase in Fixed Assets 0 0 0 0 0 0

Fixed Investments 0 0 0 0 0 0

Pre-production Expenditures 0 0 0 0 0 0

4. Increase in Net Working Capital 0 0 0 0 0 0

5. Operating Costs 4063016 4063016 4063016 4063015.74 4063015.74 4063015.74

6. Corporate Tax Paid 872508.5 986132.3 1029923 1073713.65 1073713.65 1073713.65

NET CASH FLOW 3532276 3418652 3374861 3331070.63 3331070.63 3331070.63

CUMULATIVE NET CASH FLOW 6353165 9771817 13146678 16477748.8 19808819.4 23139890.1

Net Present Value (at 18%) 1308466 1073200 897841.9 751010.106 636449.24 539363.757

Cumulative Net present Value -1176171 -102971 794871.3 1545881.36 2182330.6 2721694.36
2,721,694
Net Present Value (at 18%)

Internal Rate of Return 24.1%

Annex 4: NET INCOME STATEMENT ( in Birr)
  PRODUCTION

6
 1 2 3 4 5
Capacity Utilization (%) 75% 85% 100% 100% 100%

1. Total Income 6,350,850 7,197,630 8,467,800 8,467,800 8,467,800

Sales Revenue 6,350,850 7,197,630 8,467,800 8,467,800 8,467,800
Other Income 0 0 0 0 0
2. Less Variable Cost 2,793,794 3,166,300 3,725,057 3,725,057 3,725,057
VARIABLE MARGIN 3,557,056 4,031,330 4,742,743 4,742,743 4,742,743
(In % of Total Income) 144 144 144 144 144
3. Less Fixed Costs 1,339,201 1,362,110 1,396,474 1,396,474 1,396,474
OPERATIONAL MARGIN 2,217,855 2,669,220 3,346,269 3,346,269 3,346,269
(In % of Total Income) 90 95 101 101 101
4. Less Cost of Finance 1,952,356 875,814 729,845 583,875 437,906
5. GROSS PROFIT 265,499 1,793,408 2,616,424 2,762,394 2,908,361
6. Income (Corporate) Tax 0 0 784,927 828,718 872,509
7. NET PROFIT 265,499 1,793,408 1,831,498 1,933,676 2,035,854
RATIOS (%)  
Gross Profit/Sales 4.18% 24.92% 30.90% 32.62% 34.35%
Net Profit After Tax/Sales 4.18% 24.92% 21.63% 22.84% 24.04%
Return on Investment 18.69% 22.27% 21.06% 20.70% 20.34%
Return on Equity 5.46% 36.86% 37.64% 39.74% 41.84%
Annex 4: NET INCOME STATEMENT (in Birr): Continued
PRODUCTION
  6 7 8 9 10

7
 Capacity Utilization (%) 100% 100% 100% 100% 100%

1. Total Income 8,467,800 8,467,800 8,467,800 8,467,800 8,467,800

Sales Revenue 8,467,800 8,467,800 8,467,800 8,467,800 8,467,800
Other Income 0 0 0 0 0
2. Less Variable Cost 3,725,057 3,725,057 3,725,057 3,725,057 3,725,057
VARIABLE MARGIN 4,742,743 4,742,743 4,742,743 4,742,743 4,742,743
(In % of Total Income) 144 144 144 144 144
3. Less Fixed Costs 1,163,696 1,163,696 1,163,696 1,163,696 1,163,696
OPERATIONAL MARGIN 3,579,047 3,579,047 3,579,047 3,579,047 3,579,047
(In % of Total Income) 108 108 108 108 108
4. Less Cost of Finance 291,939 145,969 0 0 0
5. GROSS PROFIT 3,287,108 3,433,077 3,579,047 3,579,047 3,579,047
6. Income (Corporate) Tax 986,132 1,029,923 1,073,714 1,073,714 1,073,714
7. NET PROFIT 2,300,976 2,403,154 2,505,332 2,505,332 2,505,332
RATIOS (%)  
Gross Profit/Sales 38.82% 40.54% 42.27% 42.27% 42.27%
Net Profit After Tax/Sales 27.17% 28.38% 29.59% 29.59% 29.59%
Return on Investment 21.32% 20.96% 20.60% 20.60% 20.60%
Return on Equity 47.29% 49.39% 51.49% 51.49% 51.49%
Annex 5: Projected Balance Sheet (in Birr)
CONSTRUCTION PRODUCTION
  Year 1 Year 2 1 2 3 4
TOTAL ASSETS 5,485,056 12,164,069 13,122,388 13,791,765 14,545,420 15,262,686

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1. Total Current Assets 0 1,193,957 3,210,792 4,938,685 6,750,856 8,526,638
Inventory on Materials and Supplies 0 0 507,593 575,272 676,790 676,790
Work in Progress 0 0 107,864 122,247 143,819 143,819
Finished Products in Stock 0 0 215,729 244,494 287,638 287,638
Accounts Receivable 0 0 692,820 785,196 923,760 923,760
Cash in Hand 0 0 64,283 72,854 85,710 85,710
Cash Surplus, Finance Available 0 1,193,957 1,622,505 3,138,626 4,633,136 6,408,921
Securities 0 0 0 0 0 0
2. Total Fixed Assets, Net of Depreciation 5,485,056 10,970,112 9,911,596 8,853,080 7,794,564 6,736,048
Fixed Investment 0 5,223,863 10,447,726 10,447,726 10,447,726 10,447,726
Construction in Progress 5,223,863 5,223,863 0 0 0 0
Pre-Production Expenditure 261,193 522,386 522,386 522,386 522,386 522,386
Less Accumulated Depreciation 0 0 1,058,516 2,117,032 3,175,548 4,234,064
3. Accumulated Losses Brought Forward 0 0 0 0 0 0
4. Loss in Current Year 0 0 0 0 0 0
TOTAL LIABILITIES 5,485,056 12,164,069 13,122,388 13,791,765 14,545,420 15,262,686
5. Total Current Liabilities 0 0 692,820 785,196 923,760 923,760
Accounts Payable 0 0 692,820 785,196 923,760 923,760
Bank Overdraft 0 0 0 0 0 0
6. Total Long-term Debt 3,291,034 7,298,443 7,298,443 6,082,036 4,865,629 3,649,222
Loan A 3,291,034 7,298,443 7,298,443 6,082,036 4,865,629 3,649,222
Loan B 0 0 0 0 0 0
7. Total Equity Capital 2,194,022 4,865,629 4,865,629 4,865,629 4,865,629 4,865,629
Ordinary Capital 2,194,022 4,865,629 4,865,629 4,865,629 4,865,629 4,865,629
Preference Capital 0 0 0 0 0 0
Subsidies 0 0 0 0 0 0
8. Reserves, Retained Profits Brought Forward 0 0 0 265,499 2,058,907 3,890,402
9.Net Profit After Tax 0 0 265,499 1,793,408 1,831,498 1,933,676
Dividends Payable 0 0 0 0 0 0
Retained Profits 0 0 265,499 1,793,408 1,831,498 1,933,676
Annex 5: Projected Balance Sheet (in Birr): Continued
PRODUCTION
  5 6 7 8 9 10
TOTAL ASSETS 16,082,133 17,166,702 18,353,448 20,858,780 23,364,113 25,869,445
1. Total Current Assets 10,404,601 12,314,909 14,327,394 17,658,465 20,989,536 24,320,607

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 Inventory on Materials and Supplies 676,790 676,790 676,790 676,790 676,790 676,790
Work in Progress 143,819 143,819 143,819 143,819 143,819 143,819
Finished Products in Stock 287,638 287,638 287,638 287,638 287,638 287,638
Accounts Receivable 923,760 923,760 923,760 923,760 923,760 923,760
Cash in Hand 85,710 85,710 85,710 85,710 85,710 85,710
Cash Surplus, Finance Available 8,286,884 10,197,189 12,209,675 15,540,745 18,871,816 22,202,887
Securities 0 0 0 0 0 0
2. Total Fixed Assets, Net of Depreciation 5,677,532 4,851,793 4,026,054 3,200,315 2,374,576 1,548,838
Fixed Investment 10,447,726 10,447,726 10,447,726 10,447,726 10,447,726 10,447,726
Construction in Progress 0 0 0 0 0 0
Pre-Production Expenditure 522,386 522,386 522,386 522,386 522,386 522,386
Less Accumulated Depreciation 5,292,580 6,118,319 6,944,058 7,769,797 8,595,535 9,421,274
3. Accumulated Losses Brought Forward 0 0 0 0 0 0
4. Loss in Current Year 0 0 0 0 0 0
TOTAL LIABILITIES 16,082,133 17,166,702 18,353,448 20,858,780 23,364,113 25,869,445
5. Total Current Liabilities 923,760 923,760 923,760 923,760 923,760 923,760
Accounts Payable 923,760 923,760 923,760 923,760 923,760 923,760
Bank Overdraft 0 0 0 0 0 0
6. Total Long-term Debt 2,432,814 1,216,407 0 0 0 0
Loan A 2,432,814 1,216,407 0 0 0 0
Loan B 0 0 0 0 0 0
7. Total Equity Capital 4,865,629 4,865,629 4,865,629 4,865,629 4,865,629 4,865,629
Ordinary Capital 4,865,629 4,865,629 4,865,629 4,865,629 4,865,629 4,865,629
Preference Capital 0 0 0 0 0 0
Subsidies 0 0 0 0 0 0
8. Reserves, Retained Profits Brought Forward 5,824,078 7,859,930 10,160,906 12,564,060 15,069,392 17,574,724
9. Net Profit After Tax 2,035,854 2,300,976 2,403,154 2,505,332 2,505,332 2,505,332
Dividends Payable 0 0 0 0 0 0
Retained Profits 2,035,854 2,300,976 2,403,154 2,505,332 2,505,332 2,505,332

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